Managerial Accounting – Decision Making, Cost
Behavior & Break-Even Analysis | 2024 Exam Review
| Special Orders & Constraints
Kinsi Corporation manufactures five different products. All five of these products must pass
through a stamping machine in its fabrication department. This machine is Kinsi's constrained
resource. Kinsi would make the most profit if it produces the product that: ✔✔generates the
highest contribution margin per stamping machine hour
Accepting a special order will improve overall net operating income if the revenue from the
special order exceeds: ✔✔the incremental costs associated with the order
If total fixed costs increase while variable costs and sales price are unchanged, what happens to
the break-even point? ✔✔The break-even point increases, and therefore more units must be
sold to break-even.
A relevant cost is: ✔✔A cost that differs across decision alternatives.
At the break-even point: ✔✔Both sales would be equal to total costs and contribution margin
would be equal to total fixed costs are correct
A cost that cannot be avoided or changed because it arises from a past decision, and is
irrelevant to future decisions, is called a(n): ✔✔Sunk cost.
What is the formula for calculating contribution margin ratio? ✔✔Contribution margin / Sales
The potential benefits lost by taking a specific action when two or more alternative choices are
available is known as a(n): ✔✔Opportunity cost.
Once sales reach the break-even point, each additional unit sold will: ✔✔increase profit by an
amount equal to the per unit contribution margin.
Behavior & Break-Even Analysis | 2024 Exam Review
| Special Orders & Constraints
Kinsi Corporation manufactures five different products. All five of these products must pass
through a stamping machine in its fabrication department. This machine is Kinsi's constrained
resource. Kinsi would make the most profit if it produces the product that: ✔✔generates the
highest contribution margin per stamping machine hour
Accepting a special order will improve overall net operating income if the revenue from the
special order exceeds: ✔✔the incremental costs associated with the order
If total fixed costs increase while variable costs and sales price are unchanged, what happens to
the break-even point? ✔✔The break-even point increases, and therefore more units must be
sold to break-even.
A relevant cost is: ✔✔A cost that differs across decision alternatives.
At the break-even point: ✔✔Both sales would be equal to total costs and contribution margin
would be equal to total fixed costs are correct
A cost that cannot be avoided or changed because it arises from a past decision, and is
irrelevant to future decisions, is called a(n): ✔✔Sunk cost.
What is the formula for calculating contribution margin ratio? ✔✔Contribution margin / Sales
The potential benefits lost by taking a specific action when two or more alternative choices are
available is known as a(n): ✔✔Opportunity cost.
Once sales reach the break-even point, each additional unit sold will: ✔✔increase profit by an
amount equal to the per unit contribution margin.
